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ARTICLE · 30 SEPTEMBER 2022

CFTC Asserts DAO Members Are Liable For Actions Of The DAO

Herbert Smith Freehills Kramer LLP
Herbert Smith Freehills Kramer LLP
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Herbert Smith Freehills Kramer LLP

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In a new development, the Commodity Futures Trading Commission (CFTC or Commission) has charged that "voting members" of the Ooki DAO are liable for its violations of the Commodity Exchange Act (CEA) and CFTC regulations by facilitating margined and leveraged retail commodity transactions.[

United StatesTechnology
Kristopher B. Kastens
Kristopher B. Kastens
John Bessonette
John Bessonette
Timothy Layden
Timothy Layden
Eva Tanna
Eva Tanna
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In a new development, the Commodity Futures Trading Commission (CFTC or Commission) has charged that "voting members" of the Ooki DAO are liable for its violations of the Commodity Exchange Act (CEA) and CFTC regulations by facilitating margined and leveraged retail commodity transactions.1 This is notable because it is the first instance of a federal agency asserting that members of a Decentralized Autonomous Organization (DAO) are liable for the actions of the DAO simply because they were voting members. The CFTC's action has alarmed many in the crypto community, who believed that the decentralized nature of DAOs would effectively make them immune to U.S. regulations. The action has also drawn dissent within the ranks of the CFTC from Commissioner Summer Mersinger, who took issue with the CFTC imputing liability on the DAO members simply because they were voting members, calling it "an unsupported legal theory amounting to regulation by enforcement."2

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